Mr. Coffman of
Colorado introduced the following bill; which was referred to the
Committee on Ways and
Means

A BILL

To amend the Internal Revenue Code of 1986 to allow an
additional advance refunding for certain tax-exempt bonds.

1.

Short title

This Act may be cited as the
Local Schools and Infrastructure
Improvement Act of 2012.

2.

Additional
advance refunding of certain tax-exempt bonds

(a)

In
general

Clause (i) of section
149(d)(3)(A) of the Internal Revenue Code of 1986 is amended to read as
follows:

(i)

the refunding bond is only the 1st or 2nd
advance refunding of the original
bond,

.

(b)

Advance
refunding bond requirements

(1)

In
general

Subparagraph (A) of section 149(d)(3) of such Code is
amended by striking and at the end of clause (iv), by striking
the period at the end of clause (v), and by adding at the end the following new
clause:

(vi)

in the case of the 2nd advance refunding of
the original bond—

(I)

the issuer is
projected to realize present value debt service savings (determined without
regard to administrative expenses) in connection with the issue of which the
refunding bond is a part,

(II)

the average
maturity date of the issue of which the refunding bond is a part is not later
than the average maturity date of the bonds to be refunded by such issue,
and

(III)

the amount of
the refunding bond does not exceed the outstanding amount of the refunded
bond.

For purposes
of clause (vi)(II), average maturity dates shall be determined under rules
similar to the rules of section
172(b)(2).

.

(2)

Exceptions

Paragraph
(3) of section 149(d) of such Code is amended by adding after subparagraph (B)
the following new subparagraph:

(C)

Special rule for
2nd advance refundings

Clause
(vi) of subparagraph (A) shall not apply in the case of a 2nd advance refunding
if—

(i)

the original bond
has been redeemed, or

(ii)

the issuer determines that the 2nd advance
refunding is necessary to avoid or terminate a default in the payment of debt
service on the refunded
bond.

.

(c)

Effective
date

The amendment made by this section shall apply to refunding
bonds issued on or after the date of the enactment of this Act.

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